Series 7 Top Off Unit 1

Institutional communication

This category includes any type of written or electronic communication that is distributed or made available only to institutional investors.
Including institutional imvestors:
Member firm or registered person of the member firm, bank, savings and loan, i

Retail Communication

FINRA rule 2210. This category is defined as any written or electronic communication that is distributed or made available to more than 25 retail investors within a 30-calendar-day period.
Note: A retail investor is considered any person who does not meet

Correspondence

Written or electron a communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar day.

Public Appearances

Company representatives speaking publicly on behalf of the firm and its products.
Is participation in a seminar, webinar, forum (including interactive electronic form such as chart room) or other public appearance or public meeting activity
Therefore, pre

Independently Prepared Reprint (IPR)

Any article reprint that meets certain standards designed to ensure that the reprint was issued by an independent publisher and was not materially altered by the member
And article reprint qualifies as an IPR Under the rules only if, among other things, i

Research Report

A document prepared by an analyst or strategist who is a part of the investment research team in a stock brokerage or investment bank. Research reports generally have "actionable" recommendations.
The report may focus on individual stock or sector of the

Quiet Period

time period after prospectus is filed when company must restrict what is said about the company

Quiet Period

Remember must not publish or distribute research reports and research analyst may not make public appearances if the member has participated as an underwriter or a dealer in the issuers initial public offering or, with respect to the quiet periods after a

Generic Advertising SEC Rule 135A

Promotes securities as an investment medium but does not refer to any specific security.
-Must contain name and address of the sponsor of the advertisement but NEVER include the name of any specific security.
-Can only be placed by a firm that offers that

Institutional Communication

No preapproval of a principal is required.
One such procedures do not require review of all these types of communications prior to first use or distribution, they must include provisions for the education and training of associated persons as to the firms

Correspondence

Pre-or post review of a principal is required (reviewed before or after use)

Public Appearance

Preapproval of a principal may be required but is not mandated

Independently Prepared Reprint (IPR)

Must be preapproved by a principal If the communication meets the definition of a retail communication

Research reports

Approval requirements are based on how they are defined (institutional, retail).
Research reports covering only securities listed on a national securities exchange is excluded from Rule 2210's filing requirements

Website Communication

Preapproval of a principal is required

electronic bulletin board

internet forum that allows users to post and read messages on a specific topic
Use of this by registered representative must be preapproved by a principal, although each post does not require principal approval

Emails and instant messaging

Approval requirements are based on how they are defined (institutional, retail, or correspondence)
Electronic communication

Generic advertising online

Electron a communications preapproval of a principal is required

Filing Requirements

When a firm becomes registered with FINRA during the first year of operation, they Require the member to file any retail communication that is published or used in any electronica or other public media, including any generally accessible website, newspape

Ranking Entity

Refers to any entity that provides general information about investment companies to the public, that is independent of the investment company and its affiliates, and his services are not procured by the investment company or any of its affiliates to assi

Required disclosures of investment company rankings

The name of the category
The name of the ranking entity, the fact that the investment company or an affiliate created the category or subcategory, criteria on which the ranking is based (e.g. total return, risk adjusted performance), the fact that past pe

Bond mutual funds volatility rating

Is a description issued by an independent third-party, relating to the sensitivity of the net asset value of a portfolio of it open and management investment company that invests in debt securities two changes in market conditions in the general economy,

Trust Indenture Act of 1939

Corporate bond issues of $50 million or more sold interstate.
Federal law requiring all corporate bonds to be issued under an INDENTURE agreement approved by the SEC and providing for the appointment of a qualified trustee free of conflict of interest wit

No, Restricted shares under rule 144 are considered illiquid

Can restricted shares be used to cover a short calls?

Yes, true

True or false
Is a broker-dealer prohibited from presenting a client research reports, analysis, or recommendations prepared by other persons or firms without disclosing that they were prepared by a third-party

4 times a year.
Route 144 allows an affiliate to sell the greater of 1% of the outstanding shares or the average of the last four weeks trading volume with each form 144 filing.
The filing is good for 90 days or four times a year

How many times a year can affiliate holding unregistered shares sell?

Official Statement (OS)

A document concerning a municipal issue that must be provided to every buyer. The document is prepared by the underwriter from information provided by the issuer; typically included are the offering terms, descriptions of the bonds and the issuer, the und

Rule 144A regulates:

the sale of restricted stock to institutional investors or Qualified institutional buyers

Nothing, before the registration statement is filed, no sale, solicitations, or indications of interest in the issue may occur

What can happen before the Registration statement is filed for a municipal security

Never
Member firms and employees of members (registered and non-registered) are prohibited from buying new equity issue at the public offering price

Can a member firm sell a new equity issue to one of its non-registered employees?

Ranking entity

Refers to any entity that provides general information about investment companies to the public, that is independent of the investment company and its affiliates

Required disclosures of investment company rankings

The name of the category (e.g. growth), the name of the ranking entity, criteria on which the ranking is based (e.g. total return, risk-adjusted performance), the fact the performance is no guarantee of future results, a ranking based on total return must

Blind Ad

A recruitment ad in which the identity and address of the employer are omitted.
In a recruitment advertising the firm need not list his name in posting an advertisement

Variable Annuity

Annuity that has a varying rate of return based on the mutual funds in which one has invested

Variable Life Insurance

life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder
a fixed-premium policy in which the death benefit and cash values vary according to the investment experience of a separate

Communications regarding variable contracts, life insurance and annuities

All communications must clearly describe the product as either variable life or variable annuity
Liquidity: Any statement about the ease of liquidation must be accompanied by the negative impact of factors such as contingent deferred sales loads, tax pena

Single premium variable life insurance

Type of life insurance in which the premium is paid up front with a single, lump sum payment. After the initial payment, those who have this type of insurance no longer have to make any more premium payments

Hypothetical illustrations

Showing assumed rates of return maybe used to demonstrate the performance of variable life policy's.
These May not be used to project or predict investment results

Due Diligence Meeting

A meeting at which an issuing corporation's officials and representatives of the underwriting group present information on and answer questions about a pending issue of securities. The meeting is held for the benefit of brokers, securities analysts, and i

Registration statement

a long, complex document that firms must file with the SEC when they sell securities through a public offering

Underwriter

A broker dealer specializing in investment banking the process of underwriting new issues
They advise corporations on the best way is to raise long-term capital, a raise capital for issuers by distributing new securities, they buy securities from issuers

Underwriting manager or syndicate manager

The investment banker who negotiates with the issuer

investment bank

a financial intermediary that specializes in helping firms raise financial capital by issuing securities in primary markets
They help issuers raise money through the sale of securities. They do not loan money. They are also called underwriters

syndicate agreement/syndicate letter

-describes the participants' responsibilities (particularly for any shares that remain unsold at the underwriting syndicate's termination)and allocation of syndicate profits, if any.
-designates the syndicate manager to act on behalf of the syndicate memb

Negotiated Underwriting

Underwriting of new securities issue in which the SPREAD between the purchase price paid to the issuer and the public offering price is determined through negotiation rather than competitive bidding. The spread, which represents the compensation to the in

Competitive bid underwriting

A form of firm commitment underwriting in which rival syndicates submit sealed bids for underwriting the issue. Competitive bidding normally is used to determine the underwriters for issues of general obligation municipal bonds and is required by law in m

Selling Group Formation

Although the members of an underwriting syndicate agree to underwrite an entire offering, they frequently enlist other firms to help distribute the securities as members of this.
Note: Send the kids are usually formed to spread the risk among several unde

firm commitment underwriting

the type of underwriting in which the underwriter buys the entire issue, assuming full financial responsibility for any unsold shares
The managing underwriter takes on the financial risk because he purchases the securities from the issuer. Because he rese

stand-by underwriting

Commitment: an agreement in a rights offering between an investment banker and a corporation whereby the banker agrees for a negotiated fee to purchase any or all shares offered as a subscription privilege that are not bought by the rights holders by the

best efforts arrangement

Agreement for the sale of securities in which the investment bank handling the transaction gives no guarantee that the securities will be sold.

All or nothing underwriting

The issue and corporation has determined that it was an agreement outlining that the underwriter must either sell all the shares or cancel the underwriting

Mini-max

a type of best efforts underwriting where the syndicate must sell a minimum amount and may sell up to a higher, maximum amount.

Firm commitment

Principal capacity, underwriter has risk

Best efforts

Agency capacity, underwriter has no risk

standby offering

A firm commitment offering involving unexercised preemptive rights

How to price a new issue

Variables to consider
Indications of interest, prevailing market conditions, price that the syndicate members will accept ,Price to earnings ratio of similar companies, the companies dividend payment record and financial health, the companies debt ratio

Stabilizing Price

When demand is considerably lower than supply for a new issue the price in the aftermarket is likely to fall. Under the circumstances the underwriter can bid For shares in the open market.

Syndicate Penalty Bid

-if syndicate members clients turn in shares on a stabilizing big after the issue is sold out
Stabilizing beds must not be made at a price higher than the public offering price
This term is called pegging, or fixing, and is prohibited.
If public interest

Underwriting compensation

The amount paid to a broker/dealer firm for its involvement in offering and selling securities.
The price at which underwriters buy stock from issue or is always difference from the price at which they offer this year is to the public.

Underwriting proceeds

-the price the issuer receives

Public Offering Price (POP)

The amount paid by a purchaser of a primary offering. For an IPO, the POP is fixed on the effective date and may appear on a final prospectus.

Underwriting Spread

difference between what the investment bank gets from selling securities to public investors and what they pay to the issuing firm
Includes the managers fee, the underwriting fee, selling concession

Underwriting Fee

Compensates syndicate members for assuming the risk of not being able to sell the shares

Manager's Fee

typically the smallest piece of the spread, paid to the managing underwriter for every share sold by the syndicate

Selling Concession

typically, the largest piece of the underwriting spread going to the firm credited with making the sale

Industry standard practices for allocating the Spread

Underwriting component
Syndicate managers fee equals 10 to 20%
Underwriting syndicate fee equals 20 to 30%
Selling concessions equals 50 to 60%

gross spread (underwriter discount)

the difference between the price paid to the issuer and the investment bank reoffering price

Final prospectus (effective, statutory prospectus)

When the registration statement for corporate securities becomes effective, the issue or a man's the preliminary prospectus and dad's information, including the final offering price and the underwriting spread for this

Final prospectus must include

A description of the offering, the offering price, selling discounts, the offering date, use of the proceeds, a description of the underwriting, but not the actual contract, the statement of the possibility at the issues price baby stabilized, history of

SEC disclaimer

The SEC reviews the prospectus to ensure that it contains the necessary material facts, but it does not guarantee the disclosure's accuracy. Furthermore, the SEC does not approve the issue but simply clears it for distribution. Implying that the SEC has a

Summary Prospectus (SEC Rule 498)

Summary of statutory prospectus that the mutual fund can provide investor w/ app to purchase (or they can request statutory prospectus before purchase)
Must include
-Legend on cover page
-Fund's name and class or classes
-Exchange ticker symbol of the fun

Statement of Additional Information (SAI)

detailed registration document for an open-end or closed-end management company providing further details than what is contained in the statutory prospectus.

Trust indenture act of 1939

Federal law requiring all corporate bonds to be issued under an INDENTURE agreement approved by the SEC and providing for the appointment of a qualified trustee free of conflict of interest with the issuer. The Act provides that indentures contain protect

Trust Indenture

The formal agreement between bondholders and the issuer as to the terms of the debt.
Series of promises between the issuer and the trustee for the benefit of the bondholders

Official Statement (OS)

A document concerning a municipal issue that must be provided to every buyer. The document is prepared by the underwriter from information provided by the issuer; typically included are the offering terms, descriptions of the bonds and the issuer, the und

Official notice of sale

Notice published by a municipality inviting investment bankers to submit competitive bids for an upcoming bond issue. The notice provides the name of a municipal official from whom further details can be obtained. The Bond Buyer regularly carries such not

Selling groups

They take no financial responsibility in an underwriting. The only get paid for what they sell.

Regulation A+ (SMB corporate offerings)
Regulation D (private placements)
Rule 147 (intrastate)
Regulation S (foreign sales made by US issuers)
Rule 144
Rule 144A
Rule 145

Securities offered by industrial, financial, and other corporations may qualify for an exemption from the registration statement and prospectus requirements under these exclusionary provisions

Regulation D

SEC rules concerning PRIVATE PLACEMENTS and defining related concepts such as ACCREDITED INVESTOR.
The SEC does not require registration of an offering if it is private replaced with
Accredited investors but do not need SEC protection
Or if it's placed wi

Accredited investor

Has a net worth of 1M$ or more
Has had an annual income in excess of $200,000 in each of the two most recent years or $300,000 jointly with a spouse
Is an insider
Or has institutions such as a pension plan

Lettered stock

Private placement stock

Legend stock

Private placement stock

Terms synonymous with private place meant stock (regulation D)

Restricted (because it must be held for a six-monthperiod)
Unregistered (no registration statement on file with the SEC)
Letter stock (investor agreed to terms by signing an investment letter)
Legend stock (bears a restrictive legend on the certificate)

The company cannot use general solicitation or advertising and is limited to 35 non-accredited investors (506b)
The company can advertise as long as it sells exclusively to accredited investors(506c)

Under rule 506, the exemption can be approached in one of two ways

Rule 501

An accredited investor can be
An insider, a professional, sophisticated, or institutional investor
Or an individual that meets the accredited investor rule of $1MM OR $200K/$300(jointly)

Rule 147 Intrastate Offerings

-offerings that take place in entirely one state are exempt from registration when:
>the issuer has its principal office and receives at least 80% of its income in the state
>at least 80% of the issuer's assets are located within the state
>at least 80% o

Rule 144A

Allows non-registered foreign and domestic securities to be sold to certain institutional investors in the United States without holding period Requirements

Rule 134 - tombstone advertisement Communications Not Deemed a Prospectus

May be placed by the syndicate manager on or before the offerings effective date and is limited to the name of the issuer, type of security being offered, number of shares to be sold, public offering price, and the names of the syndicate members

Rule 147 Intrastate Offerings

In and intrastate offering, a purchaser of the new issue may not resell the securities to a resident of another state for at least six months after the purchase date

anti-fraud provisions sec act 1934

All securities are subject to the anti-fraud provisions of federal securities law. It should be recognized that commodities such as wheat or oil or not securities

80% rule

What percentage of an issues gross revenue Must be derived from the company's home state Rule 147

The secondary market

The securities exchange act of 1934 created by the SEC regulates what market

They may be required to return the concession they were originally paid

What happens if the selling group members liquidate into the stabilizing bid